Thousands of patients who developed chronic liver disease after being infected with hepatitis C will be switched to more effective and expensive treatments. The decision was announced as the government steps up its battle against hepatitis C, a potential killer which has shown alarming increases over the last decade.

Official endorsement for the drug pegylated interferon, usually taken in combination with another anti-viral drug, could significantly increase the drugs bill for fighting one of Britain's most serious public health threats.

But the drug's success in treating many patients has meant that the National Institute for Clinical Excellence (Nice), the government's good-practice watchdog in England and Wales, has backed its far greater use.

Only about 2,000 patients are thought at present to use either pegylated interferon or the more standard interferon alpha, but that number is expected to grow rapidly, using regimes which could be £3,200 more expensive for each patient. Even conservative estimates put the extra cost at around £11m a year.

People infected with hepatitis C often carry it unknowingly for years. Between 50,000 and 500,000 people may have the virus. If the higher figure is accurate, far fewer than one in 10 people with the disease is diagnosed.

Around one in five known to have been exposed to the virus will eventually develop acute hepatitis, which can take more than 20 years to become evident.

Graham Foster, consultant hepatologist with Barts and the Royal London NHS trust, said: "This is the first positive step which will allow patients in the UK to receive the same treatment choice which has been available to patients in other parts of the world for many years."